The Future of Bilateral Trade: US and Brazil

In Brazil, pro-China constituency groups have emerged over the last two decades.Brazilian officials are getting bound in knots because China is such a powerful economic magnet, and breaking free will be difficult.

Now, if you believe the future of US-China ties will be relatively calm, these limits do not have to be an issue. Brazil will grow more interdependent with China. Many Brazilian interest groups will benefit from Chinese commerce and money, and there will be no problem.

This is exactly what the [Bill] Clinton administration envisioned. Then, following governments urged China to come to Latin America and join the Inter-American Development Bank, for example, because it was a convenient method for China's extra wealth to fill a hole that the United States was unwilling or unable to fill.

The difficulty is that if we believe that future US-China ties will be more conflictual, we are in serious trouble. The US will therefore have a strong incentive to pressure Latin American countries, particularly Brazil, to cut ties with China. They won't be able to do so since it will be politically impossible domestically, leaving the US with little choice except to play regional hegemony and lay down the law.

There is another set of limits, and I believe it is critical for US officials to grasp them because they dictate how any Brazilian government must interact with China.

Chris Chivvis: [The environment is] a complex internal political and economic issue in Brazil. What can the United States do to help minimize, if not halt, rainforest deforestation?

Margaret Myers: I believe there is a perception in the United States right now that more needs to be done, and that Brazil's $500 million pledge to the Amazon Fund fell short of expectations. Especially when you consider the figures that China frequently throws around—which are pretty large, but do not always come to fruition. The Biden administration is now aiming to boost this amount by raising around $1 billion to promote land restoration. So, if that happens, it will ideally have a greater impact on Amazon and the bilateral relationship.

However, the United States' current instruments are restricted and slow. And this extends to all of Latin America, as countries seek aid from and engage with the United States. There is a desire in expanding collaborations. However, if the funding is not available, or if it is not available in sufficient quantities, this can be troublesome. So, I'd suggest that our toolkit has some limitations that will make broader participation, including in the climate domain, more challenging.

Chris Chivvis: What does Brazil's domestic political economy look like?

Matias Spektor: Brazil's deforestation and climate problems are massive, owing in part to the fact that so many millions of people rely on carbon emissions to survive. Land use is the primary source of carbon emissions in Brazil. So switching to anything different will cost tens of billions of dollars. And within that, the United States has very little to offer—no amount of money will suffice in comparison to what Brazil need. So I believe that the future of the US-Brazil relationship should revolve around it, but there is an opportunity today.

Brazil is preparing to launch its own Inflation Reduction Act. Subsidies and industrial policy are primarily used to promote the transition to a low-carbon economy. The job of getting that to function without significant corruption scandals or inefficiency will be huge. There is a significant chance for collaboration between the two countries, particularly in the private sector.

Another area where there is potential for collaboration—but also significant risk—is climate-related organized crime.

One of the issues Brazil faces, particularly in the Amazon, is organized crime, which is responsible for livestock laundering, illicit forestry, and illegal mining. When the Lula government took office, the minister of environment discovered that the Amazon region had [at least 1,200] unauthorized airstrips. And the trouble with illegal airstrips in a landmass the size of Europe is that if you bomb them from the air with federal police assistance, they are rebuilt within three or four days.

There will be no more talk of America collaborating militarily or even cooperating with Brazil's police. Brazilian elites are scared of a US military presence in South America. But what can fly is cooperation to assist Brazil in dealing with the end of the illicit trade cycle, which involves trade across the Atlantic into Africa and then into Europe, where consumer markets exist for drugs, illegal logging, illegal mining, and so on. Outside of the Amazon, I believe there is an opportunity for intelligence and military cooperation. However, as Margaret stated, America's ability to support Brazil in this matter would be limited.

Christopher Chivvis: What are the parallels and differences in Brazilian strategic thought compared to the other BRICS developing powers?

Matias Spektor: Let me choose two: India and Indonesia. These countries share many similarities with Brazil, and Brazil has developed increasingly good and tight ties with them. They identify as having had a postcolonial experience and are rising through the world's levels.

So, what can we conclude about the comparisons? This is quite tricky. India is in an attractive situation from Brazil's perspective since it can provide trade support to the United States in ways that Brazil cannot. India has geopolitical significance in the context of counterbalancing China. And India is profiting from this, primarily through military cooperation and purchases, as well as a massive diaspora in the United States that is highly educated and well-paid. Brazil lacks these characteristics, making it difficult to compare the relationship between Washington and New Delhi to Washington and Brasília. Brazil is considerably weaker.

Then take Indonesia. Indonesia's foreign policy closely resembles Brazil's. When Indonesian ambassadors speak, they sound like Brazilians. The president, Joko Widodo, is the only person I believe has met with the presidents of the United States, Russia, and Ukraine in recent months. This is a man who sees himself as attempting to hedge his bets by not taking sides and benefiting from the current competition. However, Indonesia is located in an area of the world where China claims regional control. So the disparities are tremendous.

Stewart Patrick of Carnegie wrote a recent post saying that we shouldn't truly term the Global South "the Global South."

This is a diverse group of countries, but there is something that brings them together. And what connects them is their shared sense of being at the bottom of a global hierarchy. These are countries that have faced colonialism, economic injustice, and racial injustice, and they have a common basis.

Does this imply that they create a single platform and collaborate in multilateral forums? No. However, they all agree that unipolarity is bad for them. So preserving the global liberal international order will not go over well with them because they see benefits in having both a strong China and a strong Russia.